Effects of Executive Order Could Take Years to Appear: John Barkett, MBA

John Barkett, MBA, managing director in Berkeley Research Group's Healthcare Transactions and Strategy practice, explained that the effects on both people on Medicare and pharmaceutical companies will be minimal for a couple of years until the executive order—signed by the Trump administration on May 12 with the aim of lowering drug prices—can be properly enacted.

This transcript has been lightly edited for clarity; captions are auto-generated.

Transcript

How will this executive order affect pharmaceutical companies and people on Medicare?

I'd like to tell you that these efforts to lower drug prices will lead to lower prices for Medicare beneficiaries. And if they go forward with this innovation center model, there's definitely potential there for it to lower prices for Medicare beneficiaries, if they can get through the legal risks or legal hurdles, the political hurdles, and the implementation hurdles. Those stack on top of each other, so these are high hurdles to get through to take on something like this. There's potential for benefit for patients, but we're probably a couple of years away from that. It takes time to develop the model, then it takes time to announce the model and let the industry prepare for it, and Medicare prepare for it. We're probably looking at 2027 before a model like this could go live.

Then, for pharmaceutical companies, a lot will depend on how they design the model. If it's the model that we're talking about, is it every drug? Is it just certain drugs? Is it in every state? Is it in certain states? How long does the model run? Is it for 2 years or 10? All those things will determine how much it impacts pharmaceuticals. But it's certainly a headwind for pharmaceutical manufacturers. It's putting pressure on their ability to price drugs the way they would they had planned to do it when the last time they went to market. The other ones, I would say that stuff like re-importation or some of these other threats that they're making, my sense is that that's not going to have a huge impact.